Simply Wireless, Inc. v. T-Mobile US, Inc., No. 16-1123 (4th Cir. Dec. 13, 2017) [click for opinion]
In Simply Wireless, the Fourth Circuit reviewed a district court’s determination that the claims brought by Simply Wireless against T-Mobile under the parties’ joint marketing and distribution agreement fell within that agreement’s arbitration provision. The parties had agreed that “Any claims or controversies… arising out of or relating to this Agreement…shall be resolved by submission to binding arbitration,” and “[t]he arbitration shall be administered pursuant to the JAMS Comprehensive Rules and Procedures then in effect.” The district court found that Simply Wireless’s claims arose out of the agreement and were, therefore, subject to arbitration.
On appeal, the Fourth Circuit ruled that the district court had properly dismissed the action but had erred in its reasoning. Specifically, the Fourth Circuit held that the district court should not have decided the gateway issue of whether Simply Wireless’s claims were arbitrable because the parties had delegated that issue to the arbitrator.
The Fourth Circuit explained that, consistent with arbitration’s contractual nature, parties may choose to arbitrate gateway questions of arbitrability, such as whether their agreement covers a particular controversy. Because empowering an arbitrator to determine arbitrability “cuts against the normal rule” that arbitrability disputes are for the court to resolve, a court must find by “clear and unmistakable” evidence that the parties have chosen to give arbitrability questions to an arbitrator.
The Fourth Circuit did not hold that the parties’ agreement to submit “any claims or controversies … arising out of or relating to this Agreement … to binding arbitration” constituted evidence of such clear and unmistakable intent. Such expansive general arbitration clauses were not found sufficient to delegate questions of arbitrability to the arbitrator.
The Fourth Circuit held instead that the parties had unmistakably incorporated JAMS Rules into their arbitration agreement, including Rule 11(b), which provides that “arbitrability disputes . . . shall be submitted to and ruled on by the Arbitrator.” Thus, the district court did not have authority to decide that issue and should have remanded Simply Wireless’s action to an arbitrator to decide it.
A version of this post originally appeared in the March 2018 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky.
